Best banks & credit unions of 2021

We compared more than 50 traditional banks, online banks, neobanks, and credit unions to find the best places to trust with your money.

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adam-morgan

By

Adam Morgan

Adam Morgan

Editorial Director, Personal Finance

Adam Morgan is an editorial director at Policygenius who leads the personal finance team. Previously, he led editorial teams across multiple brands at Red Ventures — including Bankrate, The Simple Dollar, NextAdvisor, Million Mile Secrets, and many others.

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by

Hanna Horvath, CFP®

Hanna Horvath, CFP®

CERTIFIED FINANCIAL PLANNER™ & Managing Editor, Growth

Hanna Horvath is a CERTIFIED FINANCIAL PLANNER™ and managing editor for growth at Policygenius. She helps produce the Easy Money newsletter, and owns all growth initiatives for Easy Money. She recently passed her exam to become a CERTIFIED FINANCIAL PLANNER™ in November 2020.

Hanna's work has appeared in NBC News, Business Insider and Inc. Magazine. She is regularly quoted in top media outlets, including CNBC, Best Company and HerMoney. She has also appeared on the Money Moolala podcast and All's Fair podcast.

Prior to Policygenius, Hanna wrote for KNBC in Los Angeles and WNBC in New York. When she isn't writing, she's (often) running, (usually) cooking and (sometimes) doing photography.

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Does it matter where you bank? In 2021, the answer is absolutely yes. There’s a huge difference between the rates, fees, and benefits available at different banks and credit unions, not to mention dramatic changes to the banking landscape over the last decade. Gone are the days when traditional banks were the only viable option. Online banks like Ally and Discover, neobanks like Chime and Varo, as well as national credit unions like Alliant and PenFed, have added innovative new perks to compete with the old brick-and-mortars.

We compared more than 50 financial institutions with our proprietary, evidence-based rating system to determine the best banks and credit unions in 2021.

Our picks

Best online bank

Discover Bank

5

|

Policygenius rating

How we score: Policygenius’ ratings are determined by our editorial team. Our methodology takes multiple factors into account, including pricing, financial ratings, quality of customer service, and other product-specific features.

Discover Bank logo

Best known for its credit cards, Discover has quietly built the best online bank in the country thanks to its 1% cashback checking account, high-yield savings account, no fees or minimum balances, and stellar customer satisfaction.

Full review

Best credit union

Alliant Credit Union

5

|

Policygenius rating

How we score: Policygenius’ ratings are determined by our editorial team. Our methodology takes multiple factors into account, including pricing, financial ratings, quality of customer service, and other product-specific features.

Alliant Credit Union logo

A far cry from your grandfather’s credit union, Alliant is a national, tech-forward, not-for-profit financial cooperative owned by its members. Alliant is also one of only two brands (with Discover) that scored a perfect 5 out of 5 in our rating system.

Visit website

Best green bank

Aspiration

4.6

|

Policygenius rating

How we score: Policygenius’ ratings are determined by our editorial team. Our methodology takes multiple factors into account, including pricing, financial ratings, quality of customer service, and other product-specific features.

Aspiration logo

Want to support climate change initiatives when you spend and save? Aspiration is a pioneer in sustainable banking with checking, savings, credit, investing, and retirement options. However, its best account, Aspiration Plus, charges a monthly fee.

Full review

Best neobank

Varo

3.8

|

Policygenius rating

How we score: Policygenius’ ratings are determined by our editorial team. Our methodology takes multiple factors into account, including pricing, financial ratings, quality of customer service, and other product-specific features.

Varo logo

The first American neobank to gain chartered bank status from the FDIC and Federal Reserve, the mobile-only Varo offers unique cashback and discount perks, not to mention a sky-high APY when your savings account meets certain requirements.

Full review

Best federal credit union

PenFed Credit Union

4.6

|

Policygenius rating

How we score: Policygenius’ ratings are determined by our editorial team. Our methodology takes multiple factors into account, including pricing, financial ratings, quality of customer service, and other product-specific features.

PenFed Credit Union logo

Hands-down the best federally chartered credit union with a national footprint, PenFed offers sky-high APYs and a dividend-earning checking account. But you’ll need to maintain minimum balances to avoid monthly fees.

Visit website

Best traditional bank

Citibank

4

|

Policygenius rating

How we score: Policygenius’ ratings are determined by our editorial team. Our methodology takes multiple factors into account, including pricing, financial ratings, quality of customer service, and other product-specific features.

Citibank logo

If you prefer brick-and-mortar branches, Citi offers the best accounts and perks of the "Big Four" national banks. It’s also the only major Wall Street bank led by a woman CEO. But you have to meet minimum balance requirements to enjoy Citi’s best rates.

Visit website

Best regional bank

Ridgewood Savings Bank

4.2

|

Policygenius rating

How we score: Policygenius’ ratings are determined by our editorial team. Our methodology takes multiple factors into account, including pricing, financial ratings, quality of customer service, and other product-specific features.

Ridgewood Savings Bank logo

If you prefer a Main Street bank and live in the state of New York, Ridgewood offers an impressive suite of banking, credit, and loan options. However, it charges a few account fees when you don’t meet minimum balance thresholds.

Visit website

Best private bank

Chase Private Client

4

|

Policygenius rating

How we score: Policygenius’ ratings are determined by our editorial team. Our methodology takes multiple factors into account, including pricing, financial ratings, quality of customer service, and other product-specific features.

Chase Private Client logo

Most private banks require $1 million or more in assets just to apply, but Chase Private Client’s threshold is “only” $150,000 between deposit and investment accounts. In return, you’ll enjoy better perks and services than traditional Chase clients.

Visit website

How to choose the best bank for you

  1. What bank accounts do you need? Most banks and credit unions offer checking accounts and savings accounts, at the very least. But if you’re interested in a money market account, a certificate of deposit (CD), or investment and retirement accounts, your options will be more limited if you want to keep all your money at the same bank. Then again, it could be in your best interests to patronize multiple banks for different needs (see question 5 below).

  2. Do you prefer physical bank branches? If you enjoy in-person customer service, you’ll need to stick with a traditional bank that operates branch offices near you — whether it’s a national megabank like Citi, or a regional bank like Ridgewood Savings Bank in New York state. But in 2021, everything you can do in a physical branch can be done online, over the phone, or on a mobile app. Plus, not having to pay for branch offices is one reason digital banks usually offer higher savings interest rates and better perks.

  3. Will you have enough deposits to avoid monthly fees? In 2019, Discover Bank made headlines by dropping all fees on its deposit accounts, which is one reason it’s our pick for best online bank. But many banks still charge monthly fees on checking, savings, and money market accounts unless you meet minimum balance requirements, which can range anywhere from $500 to $5,000 in balances or recurring direct deposits. When choosing a bank, check their website for fees and ensure you’ll be able to keep enough money in your accounts to avoid them.

  4. Does a bank’s reputation matter to you? Some banks are well known for their social impact, like Aspiration’s dedication to combating climate change, or Discover Bank’s investments in public education. Other banks — like Wells Fargo — are better known for their scandals. If a bank’s reputation matters to you like it does to us, make sure to choose a financial institution you’re proud to do business with.

  5. Do you want to keep all your accounts at the same bank or credit union? While there are many advantages to keeping as many accounts as possible with the same bank — chief among them, the ease and speed of transferring money between accounts — there are also very good reasons to patronize multiple banks. The first reason is obvious: not every bank offers every kind of account. If you’re interested in a money market account, an IRA, or a self-directed investment account, for instance, you may need to look further afield than the bank where you keep your checking account. But there’s another reason to keep your accounts at separate institutions: the “transfer friction” can actually make it easier to stick to your goals. The harder it is to take money out of your savings or investment accounts, the less likely you are to dip into them on rainy days.

Traditional banks, online banks, and neobanks

Until the 1990s, traditional banks with brick-and-mortar branch offices were the only game in town. But the advent of online banking led to the creation of fully online banks — also known as direct banks, virtual banks, digital banks, branchless banks, or internet-only banks. More recently, the smartphone revolution has inspired dozens of mobile-first neobanks — sometimes called challenger banks in the U.K., nonbanks, or fintech firms — that may only truly exist as an app that lets you manage accounts that are technically held at a partnering online bank. (For instance, all N26 accounts are FDIC-insured at Axos Bank.)

Today, around 15% of American millennials hold their primary accounts at either online banks or neobanks, and that percentage grows larger every year. [1] Meanwhile, traditional banks closed more than 5% of their U.S. branches between 2017 and 2020. [2] While there will likely always be a demand for physical bank branches and ATMs, the trend is clear — the future of banking is primarily digital.

Without needing the overhead costs to build and maintain branch offices, most online banks and neobanks pass those savings on to their customers via higher interest rates on savings accounts, fewer fees, and perks like cash back and bonus offers. However, a few neobanks have suffered highly publicized growing pains, like Chime’s account closure issues reported by ProPublica in July 2021.

Banks vs. credit unions

More than a third of Americans keep their money in a credit union instead of a bank, according to the Credit Union National Association. [3] While the vast majority of banks are for-profit corporations governed by their largest investors, credit unions are not-for-profit cooperatives owned and governed by their members.

Historically, most credit unions were regional and required you to live within a geographical area, work in a specific field, or work for a specific group of companies. But today, large credit unions with national footprints — like Alliant and PenFed — have made it possible for anyone to join after meeting certain criteria. Of course, there are still plenty of regional and community-exclusive credit unions, like the State Employees' Credit Union of North Carolina, or Navy Federal Credit Union for members of the military and their families. 

On average, credit unions typically offer better interest rates and lower fees than traditional banks, though many online banks and neobanks have begun competing and surpassing credit unions in this respect. On the other hand, some smaller credit unions are a bit outdated when it comes to technology like online banking and mobile apps, though all of the large credit unions mentioned above are extremely tech-savvy.

When rates, offerings, and technology are roughly equal, the decision between a credit union or a bank comes down to what’s important to you. Would you rather be a member of a not-for-profit financial cooperative that puts community and member service above all else? Or would you rather be a customer of a for-profit corporation that prioritizes growth? If all you need is a debit card, checking account, and savings account, the difference may be negligible. But if you have a diverse array of financial assets, and want to enjoy a more personalized, relationship-based experience — without the massive minimum balances required for private banking — consider a credit union.

Methodology

To determine the best banks and credit unions of 2021, we collected quantitative data on more than 50 major U.S. financial institutions and compared the results in a scoring rubric. Specifically, we looked at savings account APYs, product offerings, fees, mobile app satisfaction, and customer support. We rated each aspect on a scale from 1 to 5, then averaged the five scores into a single rating. Here’s a detailed breakdown of each scoring matrix.

Savings account APY

We rated the highest APY that each bank or credit union offers on a savings account (excluding accounts or rates with a minimum balance requirement greater than $1,000).

Rating

Best Savings APY

1

Less than 0.1%

2

0.10%-0.19%

3

0.20%-0.29%

4

0.30%-0.39%

5

0.40%+

Offerings

We counted how many product lines each institution offers, since many people enjoy the convenience of keeping multiple accounts at the same bank. We included deposit accounts (checking, savings, money market, certificates of deposit), credit cards, loans (personal, student, auto, home equity), mortgages and mortgage refinancing, retirement accounts, and investment accounts as distinct qualifying offerings.

Rating

Offerings

1

1 offering

2

2 offerings

3

3 offerings

4

4 offerings

5

5+ offerings

Fees

We consulted every bank’s fee schedule and terms and conditions to search for any of the following: monthly maintenance fee, overdraft fee, insufficient funds fee, debit card replacement fee, account closure fee, and stop payment order fee.

Rating

Qualifying Fees

1

4+ fees

2

3 fees

3

2 fees

4

1 fee

5

0 fees

Mobile app satisfaction

Since mobile apps are increasingly becoming the primary way people manage their bank accounts, we consulted the J.D. Power 2021 U.S. Banking Mobile App Satisfaction Study. [4] For any banks or credit unions that weren’t included in the study, we used mobile app customer ratings from the Google Play store.

Rating

J.D. Power Score

App Store Score

1

Less than 840

Less than 3.0

2

840-849

3.0-3.4

3

850-859

3.5-3.9

4

860-869

4.0-4.4

5

870+

4.5+

Customer support

Since different people prefer different support options at different times, we counted how many customer support channels each bank offers, including telephone, email, online chat, mobile app, online forums, online learning center, and physical branches.

Rating

Support Channels

1

1 option

2

2 options

3

3 options

4

4 options

5

5+ options